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Sunday, July 27, 2008

Beyond Wind Plan, Pickens Eyes Pipelines in Drought-Ridden U.S.

By Michael Milstein

Billionaire hedge-fund manager T. Boone Pickens testified before the Senate Homeland Security Committee on Tuesday to outline his new wind-power plan, but it's a water pipeline initiative that could reshape the landscape of Texas' drought dilemma. (Photograph by Chip Somodevilla/Getty Images)

Legendary Texas oilman T. Boone Pickens recently detailed his plan to wean America off foreign oil by blanketing the Great Plains with wind turbines. But Pickens also has a lesser-known plan that is centered on another commodity, one every bit as vital to America's future as energy—water. If it all works out, his water plan could remake Pickens as a whole new kind of baron.

Pickens is in the planning stages of a $1.5 billion initiative to pump billions of gallons of water from an ancient aquifer beneath the Texas Panhandle and build pipelines to ship them to thirsty cities such as Dallas. So far, no city has taken up his water company, Mesa Water, on the offer. But company officials and experts agree that a continuation of the drought impacting large portions of the United States could turn Pickens into something of a water baron. His yet-to-be-built pipeline would follow the same 250-mile corridor as electric lines carrying power from his wind farms. Pickens prompted the creation of a public water supply district, run by his employees, that can claim private land for the pipeline route through eminent domain. (Follow the pipeline's path here.)

A drought has drained water from Texas and much of the rest of the United States. That could make water an increasingly profitable commodity for those who hold the rights. According to his Web site, Pickens owns rights to more water than anyone else. "In general, there's a lot of it, it's just not in the right place," says Robert Stillwell, legal counsel for Mesa Water (and board member of the water supply district), which continues to acquire water rights in rural Texas. He dismisses questions about whether the water would be cost-competitive. For cities looking at their future water needs, he says, "cost becomes irrelevant." As far as Mesa's pipeline snaking across the Texas heartland, Stillwell insists that "it's going to happen, it's just a matter of when."

Pickens is not pioneering the use of big pipelines to transport water: A 330-mile pipeline in Australia supplies water to 100,000 people and California moves water from its northern rivers to its southern deserts with a massive network of reservoirs, aqueducts and pumps. Even in the Texas Panhandle, 323 miles of pipeline deliver water from Lake Meredith to Amarillo, Lubbock and other cities. Texas law allows private companies to pump water and sell it to cities; some have done so on much smaller scales than Pickens plans to do. But his project may become the biggest, with its profitability depending on coming municipal desperation caused by shrinking supply.

Water is such a basic human necessity that people may not like to think of it as a commodity, despite the billions of plastic bottles of it sold every year. But as population growth and climate change put new pressure on supplies, more regions may now have no choice but to look further and further away for water, says Michael Campana, a professor at Oregon State University and director of its Institute for Water and Watersheds. "If that's the case, then you can bet that money or some other item of value will change hands," he says. "We will see more such transactions in the future." Campana think Pickens is making a wise bet on a future in which (in Pickens's words) "water is the new oil," but says it may take longer than the oilman expects for the bet to pay off.

That dry future is not hard to imagine, given that the southeast United States is suffering through a lingering drought that last fall put Atlanta within weeks of running out of drinking water. Nearly a decade of drought in the Southwest has left Lake Mead, the largest reservoir in the nation, about half-full. The situation is dire in Pickens's domain, as well. The Texas Water Development Board predicts that the state's water demand will rise 27 percent by 2060, even as the supply drops about 18 percent, because the dry conditions fill reservoirs with silt and depleted aquifers. Without new supplies, by 2060 more than 85 percent of Texans will not have enough water to last through a drought, the board projects.

Mesa Water would pump its water from the Ogallala Aquifer, the largest underground water reservoir in North America with about 100 times as much water as Lake Mead holds when full. The company says it's merely delivering unused water to an area that can use it, not so different from oil, which has already made Pickens a fortune.

Dallas water officials have so far been noncommittal about buying the water; a federal judge this month denied the city's attempt to build a huge reservoir in East Texas, and in the aftermath city officials reassured the public that Dallas has about 30 years of water on hand. But Ken Kramer, director of the Sierra Club's Texas Chapter, sees the pumping plan as no less than mining of groundwater—taking more water much faster than nature can replace it. Pumping already pulls water from the aquifer 10 times faster than it refills, he says. "Basically you're mining the future of the Ogallala," Kramer says. "That's really the type of water supply you need to save until a crisis, when you have 10 years of drought."

For its part, Mesa says it can deliver enough water to supply 1.5 million Texans at a competitive price without drawing the aquifer down even halfway for 125 years. Though the price may not seem like a bargain now, it may be only a matter of time.